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Letting public retiree health benefits pile up huge debts for future taxpayers is reckless fiscal policy. State and local governments need to start reining in that growing long-range cost by paying some of the bill early, and ending such benefits where possible.

A new report by the conservative Manhattan Institute, released this week, offers some practical ideas for reducing the long-term funding gaps without requiring a huge infusion of cash from taxpayers. Such an approach makes sense, given tight budgets and red ink at both the state and local levels.

And no one should think ignoring the massive unfunded cost of retiree health care is a realistic option. The modest pension reforms legislators passed in September did not even address health benefits, which represent an enormous fiscal challenge in coming years. The state government alone faces at least a $62.1 billion shortfall over the next 30 years for health and dental benefits promised to retirees. That gap has grown by nearly 30 percent in the past five years. The steady increase in overall health care costs makes that pattern likely to continue, absent reforms.

Local governments cumulatively face a similar-sized shortfall for health benefits, with far less flexibility than the state in meeting those financial obligations. Riversideâs most recent financial report, for the 2010-11 fiscal year, listed a 30-year funding gap of $54.9 million. Coronaâs long-term shortfall for these benefits that same year was $96.6 million. Murrietaâs 2010-11 financial report shows an $11.7 million funding gap for these benefits. San Bernardinoâs most recent numbers, from 2009-10, list a $61.4 million shortfall over 30 years. And those numbers may be too low, because they rest on optimistic fiscal assumptions.

State and local governments should start cutting those long-term deficits by eliminating such benefits for new hires. Some cities have already created a new tier of less costly benefits for new employees, but taxpayers really do not need to pay for a separate retiree health program beyond Medicare. Raising the public retirement age to private-sector levels would also help shrink expenses, because the priciest benefits go to workers who retire years before they become eligible for Medicare.

Governments cannot easily trim benefits for existing workers. But public agencies could start prepaying some of the expense of retiree health care. Governments now generally pay only for the benefits retirees actually use each year. That approach differs from that of pension systems, where governments pay at least part of future pension costs in advance, thus creating investment funds whose earnings help cover payouts.

Granted, cash-strapped public coffers do not have money for such extra payments. But requiring employees to pay more toward these benefits could provide that additional funding â" and thus investment earnings that would help cover the price of retiree health care. Public employees should be willing to pick up part of the expense of a perk far better than anything most private-sector employees can expect.

California can curb the cost of retiree health benefits or let those perks drain ever more money away from public services. Elected officials and public workers should have no doubts about which course taxpayers would prefer.

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